Wednesday, August 3, 2016
US Economic Update
Truck sales still in an uptrend, yet testing the trend line from the recession low.
Manufacturing expanding after a false breakdown.
Services doing well.
Expenditures and Disposable Income growing.
Hours worked keeps on rising. The US economy may not be growing at rate that is acceptable to the media and those obsessed with growth numbers. But maybe the law of large numbers is in play here. The larger the US economy gets the more net GDP is created by a smaller growth figure. If you have 2% growth with a $17 trillion economy you generate $340 billion in GDP which would require a 34% growth rate for a $1 trillion economy to add $340 billion. Maybe we are obsessed with growth rates?
Toronto Stock Exchange Outperforming US Indices
With no growth in Canada, in fact negative growth at periods, why would the TSX be outperforming the US indices? If you have read a number of my previous posts I think you might be able to guess my reasoning.
Tuesday, August 2, 2016
All Commodities Rallying
The government numbers do not show much inflation. There is not a supply deficit for most of these metals, so why are they all rallying? War? Forecasting inflation? Bored traders?
Oil Chart and Seasonality and the Next Supply to Disappear
I have been posting a lot on oil lately here, here, here, here, here, here, here, here and here (not necessarily in order) over the last month or so. Crude oil has been a big part of my career. One reason I am still bullish on crude, besides all the other posts is that I do not believe the news leads the market but the market leads the news. This bad news is all hindsight. Below is the weekly chart.
The chart could be putting in an inverse head and shoulders pattern (could is the key word) that would match up with the other bottoms and EWT target in previous charts. The second chart is of crude oil seasonality.
Crude oil historically tends to bottom in late July (could early August this time) after having a weak June and sell off in July.
Finally, Rystad put out this chart discussing decline rates. OPEC produces about 1/3 of the global liquid hydrocarbons or 32MMbbls/d leaving about 63MMbbl to non-OPEC producers. A 7% decline rate means that approximately 4.4MMbbl/d of production is lost each year. OPEC's fields decline too, but that data is not readily published so it is fair to estimate the world loses 5+MMbbl/d each year. Add in uneconomic production due to the current price range, and it is easy to see where the next drop in supply will come from.
Friday, July 29, 2016
Elliot Wave Count - Oil
As a geologist and former investment advisor as well as corporate finance associate for a Canadian investment house that financed resource exploration I have a big interest and fascination with the commodities market. In a few previous posts I have discussed the Elliott Wave count for oil, here (my count) and here (someone elses count). It appears I have the count wrong or that the retracement of Wave 2 is larger and it re-traces 0.618 of the Wave 1 rally.
Here is my new chart. If correct we are close to completing Wave C of the correction with in Wave 2 of the main trend. Or I am just complete wrong.
Here is my new chart. If correct we are close to completing Wave C of the correction with in Wave 2 of the main trend. Or I am just complete wrong.
Crude Oil - Where is the Bottom?
I had expected the bottom to be in the $41-42 range as stated here, here, here and here and the next few days will determine if I am wrong or lucky. However, I want to post a chart from a newsletter I read that was posted back in January that has appeared to be quite accurate so far. His target is $38.43 back and a bottom in late August. To his credit he also had the bottom in February at around $30 and a peak in June at about $50.
Now compare that with the actual chart.
So if the January forecast continues to be correct, a bottom in the high $30's will form over the next few weeks and a rally into the $60s with a peak in November.
If that is the case we are close to a bottom. Only time will tell.
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